Tokyo Electric Leads Gains in Utilities as Investors Seek Haven

By Megumi Yamanaka

Sept. 17 (Bloomberg) -- Tokyo Electric Power Co., Asia's biggest utility, led gains in power and gas companies in Japan trading after Goldman Sachs Group Inc. raised its rating on the stock, citing its attractiveness at a time of market uncertainty.

Tokyo Electric gained as much as 4.2 percent to 2,880 yen on the Tokyo Stock Exchange, the biggest advance for two weeks. It traded at 2,795 yen as of 10:55 a.m. local time. The Topix Electric Power & Gas Index was 0.5 percent lower.

Hiroyuki Sakaida, an analyst at Goldman Sachs, increased the rating on Tokyo Electric to `buy' from `neutral' after share market turmoil prompted by the bankruptcy of Lehman Brothers Holdings Inc. and before the announcement of a rescue plan for American International Group Inc. Some investors favor utilities during periods of volatility because of their relatively stable earnings and dividend returns.

``With uncertainties clouding the stock market, energy stocks continue to play an important role as defensive'' investments, Sakaida said in a report released late yesterday. ``Negative news for the equity market could thus potentially become the most significant catalyst'' for Tokyo Electric, he said.

The U.S. government agreed to lend AIG as much as $85 billion in exchange for a 79.9 percent stake to save the country's biggest insurer from collapse. AIG needed the loan after its credit ratings were cut and shares plunged 79 percent since Sept. 11.

Lehman sought protection from creditors Sept. 15 after the firm's stock plunged 96 percent and its last-ditch efforts to raise more capital failed.

To contact the reporters on this story: Megumi Yamanaka in Tokyo at myamanaka@bloomberg.net.